“REINSURANCE
“SEC. 97. A contract of reinsurance is one by which an insurer procures a third person
to insure him against loss or liability by reason of such original insurance.
“SEC. 98. Where an insurer obtains reinsurance, except under automatic reinsurance
treaties, he must communicate all the representations of the original insured, and also
all the knowledge and information he possesses, whether previously or subsequently
acquired, which are material to the risk.
“SEC. 99. A reinsurance is presumed to be a contract of indemnity against liability, and
not merely against damage.
“SEC. 100. The original insured has no interest in a contract of reinsurance.
“CHAPTER II
“CLASSES OF INSURANCE
“TITLE I
“MARINE INSURANCE
“SUB-TITLE 1-A
“DEFINITION
“SEC. 101. Marine Insurance includes:
“(a) Insurance against loss of or damage to:
“(1) Vessels, craft, aircraft, vehicles, goods, freights, cargoes, merchandise, effects,
disbursements, profits, moneys, securities, choses in action, instruments of debts,
valuable papers, bottomry, and respondentia interests and all other kinds of property
and interests therein, in respect to, appertaining to or in connection with any and all
risks or perils of navigation, transit or transportation, or while being assembled, packed,
crated, baled, compressed or similarly prepared for shipment or while awaiting
shipment, or during any delays, storage, transhipment, or reshipment incident thereto,
including war risks, marine builder’s risks, and all personal property floater risks;
“(2) Person or property in connection with or appertaining to a marine, inland marine,
transit or transportation insurance, including liability for loss of or damage arising out of
or in connection with the construction, repair, operation, maintenance or use of the
subject matter of such insurance (but not including life insurance or surety bonds nor
insurance against loss by reason of bodily injury to any person arising out of ownership,
maintenance, or use of automobiles);
“(3) Precious stones, jewels, jewelry, precious metals, whether in course of
transportation or otherwise; and
“(4) Bridges, tunnels and other instrumentalities of transportation and communication
(excluding buildings, their furniture and furnishings, fixed contents and supplies held in
storage); piers, wharves, docks and slips, and other aids to navigation and
transportation, including dry docks and marine railways, dams and appurtenant facilities
for the control of waterways.
“(b) Marine protection and indemnity insurance, meaning insurance against, or against
legal liability of the insured for loss, damage, or expense incident to ownership,
operation, chartering, maintenance, use, repair, or construction of any vessel, craft or
instrumentality in use of ocean or inland waterways, including liability of the insured for
personal injury, illness or death or for loss of or damage to the property of another
person.
“SUB-TITLE 1-B
“INSURABLE INTEREST
“SEC. 102. The owner of a ship has in all cases an insurable interest in it, even when it
has been chartered by one who covenants to pay him its value in case of
loss: Provided, That in this case the insurer shall be liable for only that part of the loss
which the insured cannot recover from the charterer.
“SEC. 103. The insurable interest of the owner of the ship hypothecated by bottomry is
only the excess of its value over the amount secured by bottomry.
“SEC. 104. Freightage, in the sense of a policy of marine insurance, signifies all the
benefits derived by the owner, either from the chartering of the ship or its employment
for the carriage of his own goods or those of others.
“SEC. 105. The owner of a ship has an insurable interest in expected freightage which
according to the ordinary and probable course of things he would have earned but for
the intervention of a peril insured against or other peril incident to the voyage.
“SEC. 106. The interest mentioned in the last section exists, in case of a charter party,
when the ship has broken ground on the chartered voyage. If a price is to be paid for
the carriage of goods it exists when they are actually on board, or there is some
contract for putting them on board, and both ship and goods are ready for the specified
voyage.
“SEC. 107. One who has an interest in the thing from which profits are expected to
proceed has an insurable interest in the profits.
“SEC. 108. The charterer of a ship has an insurable interest in it, to the extent that he is
liable to be damnified by its loss.
“SUB-TITLE 1-C
“CONCEALMENT
“SEC. 109. In marine insurance, each party is bound to communicate, in addition to
what is required by Section 28, all the information which he possesses, material to the
risk, except such as is mentioned in Section 30, and to state the exact and whole truth
in relation to all matters that he represents, or upon inquiry discloses or assumes to
disclose.
“SEC. 110. In marine insurance, information of the belief or expectation of a third
person, in reference to a material fact, is material.
“SEC. 111. A person insured by a contract of marine insurance is presumed to have
knowledge, at the time of insuring, of a prior loss, if the information might possibly have
reached him in the usual mode of transmission and at the usual rate of communication.
“SEC. 112. A concealment in a marine insurance, in respect to any of the following
matters, does not vitiate the entire contract, but merely exonerates the insurer from a
loss resulting from the risk concealed:
“(a) The national character of the insured;
“(b) The liability of the thing insured to capture and detention;
“(c) The liability to seizure from breach of foreign laws of trade;
“(d) The want of necessary documents; and
“(e) The use of false and simulated papers.
“SUB-TITLE 1-D
“REPRESENTATION
“SEC. 113. If a representation by a person insured by a contract of marine insurance, is
intentionally false in any material respect, or in respect of any fact on which the
character and nature of the risk depends, the insurer may rescind the entire contract.
“SEC. 114. The eventual falsity of a representation as to expectation does not, in the
absence of fraud, avoid a contract of marine insurance.
“SUB-TITLE 1-E
“IMPLIED WARRANTIES
“SEC. 115. In every marine insurance upon a ship or freight, or freightage, or upon any
thing which is the subject of marine insurance, a warranty is implied that the ship is
seaworthy.
“SEC. 116. A ship is seaworthy when reasonably fit to perform the service and to
encounter the ordinary perils of the voyage contemplated by the parties to the policy.
“SEC. 117. An implied warranty of seaworthiness is complied with if the ship be
seaworthy at the time of the commencement of the risk, except in the following cases:
“(a) When the insurance is made for a specified length of time, the implied warranty is
not complied with unless the ship be seaworthy at the commencement of every voyage
it undertakes during that time;
“(b) When the insurance is upon the cargo which, by the terms of the policy, description
of the voyage, or established custom of the trade, is to be transhipped at an
intermediate port, the implied warranty is not complied with unless each vessel upon
which the cargo is shipped, or transhipped, be seaworthy at the commencement of each
particular voyage.
“SEC. 118. A warranty of seaworthiness extends not only to the condition of the
structure of the ship itself, but requires that it be properly laden, and provided with a
competent master, a sufficient number of competent officers and seamen, and the
requisite appurtenances and equipment, such as ballasts, cables and anchors, cordage
and sails, food, water, fuel and lights, and other necessary or proper stores and
implements for the voyage.
“SEC. 119. Where different portions of the voyage contemplated by a policy differ in
respect to the things requisite to make the ship seaworthy therefor, a warranty of
seaworthiness is complied with if, at the commencement of each portion, the ship is
seaworthy with reference to that portion.
“SEC. 120. When the ship becomes unseaworthy during the voyage to which an
insurance relates, an unreasonable delay in repairing the defect exonerates the insurer
on ship or shipowner’s interest from liability from any loss arising therefrom.
“SEC. 121. A ship which is seaworthy for the purpose of an insurance upon the ship
may, nevertheless, by reason of being unfitted to receive the cargo, be unseaworthy for
the purpose of insurance upon the cargo.
“SEC. 122. Where the nationality or neutrality of a ship or cargo is expressly warranted,
it is implied that the ship will carry the requisite documents to show such nationality or
neutrality and that it will not carry any documents which cast reasonable suspicion
thereon.